Shared Responsibility Payment Requirements for 2018

Many tax provisions brought on by the Tax Cuts and Jobs Act became effective on January 1, 2018.  One of the Act’s major changes repealed the requirement that Americans either purchase health insurance or pay a penalty on their tax return. The penalty, known as the shared responsibility payment has been eliminated, but not until 2019. There is still a penalty for being uninsured in 2018, unless the taxpayer qualifies for an exemption.

How much is the shared responsibility payment for 2018?
For 2018, the penalty is $695 for each adult and $347.50 for each child without insurance. The amount of the penalty is capped at $2,085 per family, or 2.5 percent of household income, whichever is higher. Note that these amounts may increase for 2018 due to inflation.

Who has to make a payment?
The law has not changed for 2018. Individuals are required to make a payment for the months that they did not have minimum essential healthcare coverage for themselves or their dependents, unless they qualify for an exemption. As in prior years, most exemptions can be claimed when an individual files their 2018 tax return. Other marketplace exemptions must be granted in advance and reported on the taxpayer’s 2018 tax return.

Where will the shared responsibility payment be reported?
The penalty will still be calculated on the shared responsibility worksheet. The calculated payment amount will flow from the worksheet to Schedule 4, line 61, and to line 14 on page 2 of the new Form 1040. Note that these line references may change when 2018 forms are finalized.